Cory Diary : Pricing Power

One area I notice is that many of my stock selections revolve around Pricing Power. Let's mentioned a number of them.

SHENG SIONG - Basic necessity, different market segment from main competitors, growing stores. This are good inflation hedges.

FCT - Basic necessity, Connectivity, Property and Strong Sponsor with pipelines. Another good inflation hedges.

DBS - Basic Services, Integration of Services, Regional Expansion, Sustainable Strong Dividend, Strong Cash Flow, Benefits from Rising Rate, Largest Bank of the main three banks.

TESLA - Strong Cash Flow, Demand > Supply for at least 3 months, Strong Margins, Growing EV Market Shipments, Car Pricing keeps going up.

MICROSOFT - Strong Cash Flow, OS Monopoly, Strong Margins, Pricing Power, Software Businesses ( Scaling ).

Bracing Inflation Head On !

Cory

2022-0528

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Cory Diary : Funding to buy during this market downturn

The Stock Market has been under correction mode for some period. For STI Index, it has came down to early Jan level. The NADAQ (-27% YTD - updated) seen more severe down level to last year 2021 Feb period similar to Dow Jones. Unfortunately, investment cash account has been depleting as stock gets cheaper.

If we look at Tesla -41% YTD. Apple down almost -21% YTD. If we looks into other growth stocks that is still in -VE EPS phase, -70% loss from All Time High, is not uncommon. This was my concern in the article on Cory Diary : Market Draw Down Logic in late April just a month ago.

Currently at this juncture, there is a feel that market may get worst before it can recover due to high inflation level which forces the Fed to raise rate. It looks like they won't stop unless recession is around the corner. Of-course this is calculated guessing but it may not be what we expect so please dyodd. However if opportunity arise, and if we run out of cash, one is tempted to tap on emergency fund which is a Play of Russian Roulette. This is high risk.

In a down market, Bond can get hit especially in interest rate hikes. So if we park all our money there, there is a good possibility we will also be in deep losses and may not work. Fortunately, the only company bond in the portfolio matures this month and we have a sudden cash boost ( Plain Lucky). This cash can be use in broader market choices. The stock if we are to buy now is much cheaper than most people who invest in recent times. However low can get lower as there is no way to determine when the correction will ends. My personal plan will likely as previous article ( Cory Diary : Market Fear )

Another good alternative is Singapore Saving Bonds that one can withdraw as needed without impact to capital other than the $2 withdrawal fee. And this what I did partially. This few batches planned to withdraw anyway as the new issue of SSB has much higher interests. SSB provides reserve funding for the housing loans for years in my financial strategy. If we are to use it for stock market instead, personally I can only stomach partial funding and mainly into dividend stocks which helps provide cash flow.

Dividend Strategy by itself has passive cash generation ability. The longer the dull period, the more cash receive to buy lows. So in the long run will automatically help investor to buy at good price in cash crunch period.

Finally, have a job helps to provide the needed saving cash to invest during this period.

Should I go into growth stock ? As I was concern with the huge volatility and reduced Tesla allocation ( see link ) which is still quite large, it may not makes sense for me to increase now. To close it off, this is excellent period for dividend investor to collect shares as the price can get cheaper but no ones know how long. 

Cash is King feeling in the air.

Cory

2022-0525

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Cory Diary : Market Fear

Market Opportunity Timing

Nasdaq has crashed about 25% from ATH. STI has corrected about 8.5% roughly from recent high. Many growth stocks already hit Pre-Covid level bursting the bubbles created from WFH atmosphere. No doubt Market is in Fear. As usual when market is in blood bath there is opportunity to be made. The problem is will it go lower. If we are to measure against Mar 2020 crash, we still have 1000 point to go for STI Index ! Something to think about with current high inflation. No model answer here.

Funding

The recent crash comes at a time after my fear of volatility with growth stocks, my path into multiplier and SSB hitting 2.5% for new issue. In a way, incidentally build up a reserve to tap.

Coincidentally with high SSB rate, refunded back some issues for higher rate plan and a Bond matured this month. However, I still prefer to retain most of SSB for housing loan emergency at higher rates. And I plan to reserve some fund for CPF top from the bond matured.

At max in Net, the reserve can still provide a sizeable amount if we are to deploy them into warchest other than those investment cash account which already quite depleted from recent DCAs during the sell down.

Deployment

Firstly, where should we deploy. 

We can go for Strong Reit which are coming near to 6% yield as Option 1. 

How about be a little greedy and go for High Yield Reit hitting 7% if we take into buffer consideration of exchange rate risk. Possibility mix with some other stocks. This will be Option 2.

Option 3 into S&P500 which corrected roughly 18%. Required exchanging for USD at expensive rate that tend to fall in good times as my assumption. 

Option 4 into Growth stocks with strong balance sheet and again required USD and larger volatility/Risk which blogged in earlier article.

Secondly, how much each time to deploy, the pace and amount. So far I can hardly smell any course change with current high inflation medicine. Maybe will try bits investment each time during this market sell down each day spread across a period. Once Fed makes a deliberate control to slow down the rate hike, or some major market change, we can adjust after for the next batch. So maybe 30% before and 30% after. And remaining 40% for buffer. This plan likely varies as time progress.

What a time to have Covid Buffet at Home !

Cory

2022-0513

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Articles in this Blog is personal take and sharing purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.